Missouri Revised Statutes
Chapter 376
Life, Health and Accident Insurance
←376.669
Section 376.670.1
376.671→
August 28, 2015
Provisions which shall be contained in life insurance policies, exceptions.
376.670. 1. As used in this section, operative date of the valuation
manual shall have the same meaning as set forth in section 376.365.
2. In the case of policies issued on or after the operative date of
this section, as defined in subsection 20 of this section, no policy of
life insurance, except as stated in subsection 19 of this section, shall be
delivered or issued for delivery in this state unless it shall contain in
substance the following provisions, or corresponding provisions which in
the opinion of the director of the department of insurance, financial
institutions and professional registration are at least as favorable to the
defaulting or surrendering policyholder as are the minimum requirements
specified in this section and are essentially in compliance with subsection
18 of this section:
(1) That, in the event of default in any premium payment, the company
will grant, upon proper request not later than sixty days after the due
date of the premium in default, a paid-up nonforfeiture benefit on a plan
stipulated in the policy, effective as of such due date, of such amount as
may be herein specified. In lieu of such stipulated paid-up nonforfeiture
benefit, the company may substitute, upon proper request not later than
sixty days after the due date of the premium in default, an actuarially
equivalent alternative paid-up nonforfeiture benefit which provides a
greater amount or longer period of death benefits or, if applicable, a
greater amount or earlier payment of endowment benefits;
(2) That, upon surrender of the policy within sixty days after the
due date of any premium payment in default after premiums have been paid
for at least three full years in the case of ordinary insurance or five
full years in the case of industrial insurance, the company will pay, in
lieu of any paid-up nonforfeiture benefit, a cash surrender value of such
amount as may be herein specified;
(3) That a specified paid-up nonforfeiture benefit shall become
effective as specified in the policy unless the person entitled to make
such election elects another available option not later than sixty days
after the due date of the premium in default;
(4) That, if the policy shall have become paid up by completion of
all premium payments or if it is continued under any paid-up nonforfeiture
benefit which became effective on or after the third policy anniversary in
the case of ordinary insurance or the fifth policy anniversary in the case
of industrial insurance, the company will pay, upon surrender of the policy
within thirty days after any policy anniversary, a cash surrender value of
such amount as may be herein specified;
(5) In the case of policies which cause, on a basis guaranteed in the
policy, unscheduled changes in benefits or premiums, or which provide an
option for changes in benefits or premiums other than a change to a new
policy, a statement of the mortality table, interest rate, and method used
in calculating cash surrender values and the paid-up nonforfeiture benefits
available under the policy. In the case of all other policies, a statement
of the mortality table and interest rate used in calculating the cash
surrender values and the paid-up nonforfeiture benefits available under the
policy, together with a table showing the cash surrender value, if any, and
paid-up nonforfeiture benefit, if any, available under the policy on each
policy anniversary either during the first twenty policy years or during
the term of the policy, whichever is shorter, such values and benefits to
be calculated upon the assumption that there are no dividends or paid-up
additions credited to the policy and that there is no indebtedness to the
company on the policy;
(6) A statement that the cash surrender values and the paid-up
nonforfeiture benefits available under the policy are not less than the
minimum values and benefits required by or pursuant to the insurance law of
the state in which the policy is delivered; an explanation of the manner in
which the cash surrender values and the paid-up nonforfeiture benefits are
altered by the existence of any paid-up additions credited to the policy or
any indebtedness to the company on the policy; if a detailed statement of
the method of computation of the values and benefits shown in the policy is
not stated therein, a statement that such method of computation has been
filed with the insurance supervisory official of the state in which the
policy is delivered; and a statement of the method to be used in
calculating the cash surrender value and paid-up nonforfeiture benefit
available under the policy on any policy anniversary beyond the last
anniversary for which such values and benefits are consecutively shown in
the policy.
3. Any of the foregoing provisions or portions thereof not applicable
by reason of the plan of insurance may, to the extent inapplicable, be
omitted from the policy.
4. The company shall reserve the right to defer the payment of any
cash surrender value for a period of six months after demand therefor with
surrender of the policy.
5. (1) Any cash surrender value available under the policy in the
event of default in a premium payment due on any policy anniversary,
whether or not required by subsection 2 of this section, shall be an amount
not less than the excess, if any, of the present value, on such
anniversary, of the future guaranteed benefits which would have been
provided for by the policy if there had been no default, including any
existing paid-up additions, over the sum of the then present value of the
adjusted premiums as defined in subsections 7, 8, 9, 10, 11, 12, 13, and 14
of this section corresponding to premiums which would have fallen due on
and after such anniversary, and the amount of any indebtedness to the
company on the policy.
(2) For any policy issued on or after the operative date of
subsection 14 of this section which provides supplemental life insurance or
annuity benefits at the option of the insured for an identifiable
additional premium by rider or supplemental policy provision, the cash
surrender value referred to in subdivision (1) of this subsection shall be
an amount not less than the sum of the cash surrender value for an
otherwise similar policy issued at the same age without such rider or
supplemental policy provision and the cash surrender value for a policy
which provides only the benefits otherwise provided by such rider or
supplemental policy provision.
(3) For any family policy issued on or after the operative date of
subsection 14 of this section which defines a primary insured and provides
term insurance on the life of the spouse of the primary insured expiring
before the spouse's age seventy-one, the cash surrender value referred to
in subdivision (1) of this subsection shall be an amount not less than the
sum of the cash surrender value for an otherwise similar policy issued at
the same age without such term insurance on the life of the spouse and the
cash surrender value for a policy which provides only the benefits
otherwise provided by such term insurance on the life of the spouse.
(4) Any cash surrender value available within thirty days after any
policy anniversary under any policy paid up by completion of all premium
payments or any policy continued under any paid-up nonforfeiture benefit,
whether or not required by subsection 2 of this section, shall be an amount
not less than the present value, on such anniversary, of the future
guaranteed benefits provided for the policy, including any existing paid-up
additions, decreased by any indebtedness to the company on the policy.
6. Any paid-up nonforfeiture benefit available under the policy in
the event of default in a premium payment due on any policy anniversary
shall be such that its present value as of such anniversary shall be at
least equal to the cash surrender value then provided for by the policy or,
if none is provided for, that cash surrender value which would have been
required by this section in the absence of the condition that premiums
shall have been paid for at least a specified period.
7. This subsection and subsections 8, 9, 10, and 11 of this section
shall not apply to policies issued on or after the operative date of
subsection 14 of this section. Except as provided in subsection 10 of this
section, the adjusted premiums for any policy shall be calculated on an
annual basis and shall be such uniform percentage of the respective
premiums specified in the policy for each policy year, excluding any extra
premiums charged because of impairments or special hazards, that the
present value, at the date of issue of the policy, of all such adjusted
premiums shall be equal to the sum of:
(1) The then present value of the future guaranteed benefits provided
for by the policy;
(2) Two percent of the amount of insurance, if the insurance be
uniform in amount, or of the equivalent uniform amount, as herein defined,
if the amount of insurance varies with duration of the policy;
(3) Forty percent of the adjusted premium for the first policy year;
(4) Twenty-five percent of either the adjusted premiums for the first
policy year or the adjusted premium for a whole life policy of the same
uniform or equivalent uniform amount with uniform premiums for the whole of
life issued at the same age for the same amount of insurance, whichever is
less.
8. Provided, however, that in applying the percentages specified in
subdivisions (3) and (4) of subsection 7 of this section, no adjusted
premium shall be deemed to exceed four percent of the amount of insurance
or uniform amount equivalent thereto. The date of issue of a policy for
the purpose of subsections 7, 8, 9, 10, and 11 of this section shall be the
date as of which the rated age of the insured is determined.
9. In the case of a policy providing an amount of insurance varying
with duration of the policy, the equivalent uniform amount thereof for the
purpose of subsections 7, 8, 9, 10, and 11 of this section shall be deemed
to be the uniform amount of insurance provided by an otherwise similar
policy, containing the same endowment benefit or benefits, if any, issued
at the same age and for the same term, the amount of which does not vary
with duration and the benefits under which have the same present value at
the date of issue as the benefits under the policy; provided, however, that
in the case of a policy providing a varying amount of insurance issued on
the life of a child under age ten, the equivalent uniform amount may be
computed as though the amount of insurance provided by the policy prior to
the attainment of age ten were the amount provided by such policy at age
ten.
10. The adjusted premiums for any policy providing term insurance
benefits by rider or supplemental policy provision shall be equal to (a)
the adjusted premiums for an otherwise similar policy issued at the same
age without such term insurance benefits, increased, during the period for
which premiums for such term insurance benefits are payable, by (b) the
adjusted premiums for such term insurance, the foregoing items (a) and (b)
being calculated separately and as specified in subsections 7, 8, and 9 of
this section except that, for the purposes of subdivisions (2), (3) and (4)
of subsection 7 of this section, the amount of insurance or equivalent
uniform amount of insurance used in the calculation of the adjusted
premiums referred to in (b) shall be equal to the excess of the
corresponding amount determined for the entire policy over the amount used
in the calculation of the adjusted premiums in (a).
11. Except as otherwise provided in subsections 12 and 13 of this
section, all adjusted premiums and present values referred to in this
section shall, for all policies of ordinary insurance, be calculated on the
basis of the Commissioners 1941 Standard Ordinary Mortality Table, provided
that for any category of ordinary insurance issued on and after the
effective date of this amendment on female risks, adjusted premiums and
present values may be calculated according to an age not more than three
years younger than the actual age of the insured and such calculations for
all policies of industrial insurance shall be made on the basis of the 1941
Standard Industrial Mortality Table. All calculations shall be made on the
basis of the rate of interest, not exceeding three and one-half percent per
annum, specified in the policy for calculating cash surrender values and
paid-up nonforfeiture benefits; provided, however, that in calculating the
present value of any paid-up term insurance with accompanying pure
endowment, if any, offered as a nonforfeiture benefit, the rates of
mortality assumed may be not more than one hundred * thirty percent of the
rates of mortality according to such applicable table; provided, further,
that for insurance issued on a substandard basis, the calculation of any
such adjusted premiums and present values may be based on such other table
of mortality as may be specified by the company and approved by the
director.
12. This subsection shall not apply to ordinary policies issued on or
after the operative date of subsection 14 of this section. In the case of
ordinary policies issued on or after the operative date provided in this
subsection, all adjusted premiums and present values referred to in this
section shall be calculated on the basis of the Commissioners 1958 Standard
Ordinary Mortality Table and the rate of interest specified in the policy
for calculating cash surrender values and paid-up nonforfeiture benefits,
provided that such rate of interest shall not exceed three and one-half
percent per annum, except that a rate of interest not exceeding four
percent per annum may be used for policies issued on or after September 28,
1975, and prior to September 28, 1979, and a rate of interest not exceeding
five and one-half percent per annum may be used for policies issued on or
after September 28, 1979, and provided that for any category of ordinary
insurance issued on female risks, adjusted premiums and present values may
be calculated according to an age not more than six years younger than the
actual age of the insured; provided, however, that in calculating the
present value of any paid-up term insurance with accompanying pure
endowment, if any, offered as a nonforfeiture benefit, the rates of
mortality assumed may be not more than those shown in the Commissioners
1958 Extended Term Insurance Table; provided, further, that for insurance
issued on a substandard basis, the calculation of any such adjusted
premiums and present values may be based on such other table of mortality
as may be specified by the company and approved by the director. After the
date when this subsection becomes effective, any company may file with the
director a written notice of its election to comply with the provisions of
this subsection after a specified date before January 1, 1966. After the
filing of such notice, then upon such specified date, which shall be the
operative date of this subsection for such company, this subsection shall
become operative with respect to the ordinary policies thereafter issued by
such company. If a company makes no such election, the operative date of
this subsection for such company shall be January 1, 1966.
13. This subsection shall not apply to industrial policies issued on
or after the operative date of subsection 14 of this section. In the case
of industrial policies issued on or after the operative date of this
subsection as defined herein, all adjusted premiums and present values
referred to in this section shall be calculated on the basis of the
Commissioners 1961 Standard Industrial Mortality Table and the rate of
interest specified in the policy for calculating cash surrender values and
paid-up nonforfeiture benefits, provided that such rate of interest shall
not exceed three and one-half percent per annum, except that a rate of
interest not exceeding four percent per annum may be used for policies
issued on or after September 28, 1975, and prior to September 28, 1979, and
a rate of interest not exceeding five and one-half percent per annum may be
used for policies issued on or after September 28, 1979; provided, however,
that in calculating the present value of any paid-up term insurance with
accompanying pure endowment, if any, offered as a nonforfeiture benefit,
the rates of mortality assumed may be not more than those shown in the
Commissioners 1961 Industrial Extended Term Insurance Table; provided,
further, that for insurance issued on a substandard basis, the calculation
of any such adjusted premiums and present values may be based on such other
table of mortality as may be specified by the company and approved by the
director. After the date when this subsection becomes effective, any
company may file with the director a written notice of its election to
comply with the provisions of this subsection after a specified date before
January 1, 1968. After the filing of such notice, then upon such
specified date, which shall be the operative date of this subsection for
such company, this subsection shall become operative with respect to the
industrial policies thereafter issued by such company. If a company makes
no such election, the operative date of this subsection for such company
shall be January 1, 1968.
14. (1) This subsection shall apply to all policies issued on or
after the operative date of this subsection as defined herein. Except as
provided in subdivision (7) of this subsection, the adjusted premiums for
any policy shall be calculated on an annual basis and shall be such uniform
percentage of the respective premiums specified in the policy for each
policy year, excluding amounts payable as extra premiums to cover
impairments or special hazards and also excluding any uniform annual
contract charge or policy fee specified in the policy in a statement of the
method to be used in calculating the cash surrender values and paid-up
nonforfeiture benefits, that the present value, at the date of issue of the
policy, of all adjusted premiums shall be equal to the sum of:
(a) The then present value of the future guaranteed benefits provided
for by the policy; provided, however, that the nonforfeiture interest rate
shall not be less than four percent;
(b) One percent of either the amount of insurance, if the insurance
be uniform in amount, or the average amount of insurance at the beginning
of each of the first ten policy years; and
(c) One hundred twenty-five percent of the nonforfeiture net level
premium as hereinafter defined. In applying the percentage specified in
paragraph (c) above, no nonforfeiture net level premium shall be deemed to
exceed four percent of either the amount of insurance, if the insurance be
uniform in amount, or the average amount of insurance at the beginning of
each of the first ten policy years. The date of issue of a policy for the
purpose of this subsection shall be the date as of which the rated age of
the insured is determined.
(2) The nonforfeiture net level premium shall be equal to the present
value, at the date of issue of the policy, of the guaranteed benefits
provided for by the policy divided by the present value, at the date of
issue of the policy, of an annuity of one per annum payable on the date of
issue of the policy and on each anniversary of such policy on which a
premium falls due.
(3) In the case of policies which cause, on a basis guaranteed in the
policy, unscheduled changes in benefits or premiums, or which provide an
option for changes in benefits or premiums other than a change to a new
policy, the adjusted premiums and present values shall initially be
calculated on the assumption that future benefits and premiums do not
change from those stipulated at the date of issue of the policy. At the
time of any such change in the benefits or premiums the future adjusted
premiums, nonforfeiture net level premiums and present values shall be
recalculated on the assumption that future benefits and premiums do not
change from those stipulated by the policy immediately after the change.
(4) Except as otherwise provided in subdivision (7) of this
subsection, the recalculated future adjusted premiums for any such policy
shall be such uniform percentage of the respective future premiums
specified in the policy for each policy year, excluding amounts payable as
extra premiums to cover impairments and special hazards, and also excluding
any uniform annual contract charge or policy fee specified in the policy in
a statement of the method to be used in calculating the cash surrender
values and paid-up nonforfeiture benefits, that the present value, at the
time of change to the newly defined benefits or premiums, of all such
future adjusted premiums shall be equal to the excess of (a) the sum of the
then present value of the then future guaranteed benefits provided for by
the policy and the additional expense allowance, if any, over (b) the then
cash surrender value, if any, or present value of any paid-up nonforfeiture
benefit under the policy.
(5) The additional expense allowance, at the time of the change to
the newly defined benefits or premiums, shall be the sum of:
(a) One percent of the excess, if positive, of the average amount of
insurance at the beginning of each of the first ten policy years subsequent
to the change over the average amount of insurance prior to the change at
the beginning of each of the first ten policy years subsequent to the time
of the most recent previous change, or, if there has been no previous
change, the date of issue of the policy; and
(b) One hundred twenty-five percent of the increase, if positive, in
the nonforfeiture net level premium.
(6) The recalculated nonforfeiture net level premium shall be equal
to the result obtained by dividing (a) by (b) where:
(a) Equals the sum of:
a. The nonforfeiture net level premium applicable prior to the change
times the present value of an annuity of one per annum payable on each
anniversary of the policy on or subsequent to the date of the change on
which a premium would have fallen due had the change not occurred; and
b. The present value of the increase in future guaranteed benefits
provided for by the policy; and
(b) Equals the present value of an annuity of one per annum payable
on each anniversary of the policy on or subsequent to the date of change on
which a premium falls due.
(7) Notwithstanding any other provisions of this subsection to the
contrary, in the case of a policy issued on a substandard basis which
provides reduced graded amounts of insurance so that in each policy year
such policy has the same tabular mortality cost as an otherwise similar
policy issued on the standard basis which provides higher uniform amounts
of insurance, adjusted premiums and present values for such substandard
policy may be calculated as if it were issued to provide such higher
uniform amounts of insurance on the standard basis.
(8) All adjusted premiums and present values referred to in this
section shall for all policies of ordinary insurance be calculated on the
basis of the Commissioners 1980 Standard Ordinary Mortality Table or, at
the election of the company for any one or more specified plans of life
insurance, the Commissioners 1980 Standard Ordinary Mortality Table with
Ten-Year Select Mortality Factors. All adjusted premiums and present
values referred to in this section shall for all policies of industrial
insurance be calculated on the basis of the Commissioners 1961 Standard
Industrial Mortality Table. All adjusted premiums and present values
referred to in this section shall for all policies issued in a particular
calendar year be calculated on the basis of a rate of interest not
exceeding the nonforfeiture interest rate as defined in this subsection for
policies issued in that calendar year.
(9) Except as provided in subdivision (8) of this subsection:
(a) At the option of the company, calculations for all policies
issued in a particular calendar year may be made on the basis of a rate of
interest not exceeding the nonforfeiture interest rate, as defined in this
subsection, for policies issued in the immediately preceding calendar year;
(b) Under any paid-up nonforfeiture benefit, including any paid-up
dividend additions, any cash surrender value available, whether or not
required by subsection 2 of this section, shall be calculated on the basis
of the mortality table and rate of interest used in determining the amount
of such paid-up nonforfeiture benefit and paid-up dividend additions, if
any;
(c) A company may calculate the amount of any guaranteed paid-up
nonforfeiture benefit including any paid-up additions under the policy on
the basis of an interest rate no lower than that specified in the policy
for calculating cash surrender values;
(d) In calculating the present value of any paid-up term insurance
with accompanying pure endowment, if any, offered as a nonforfeiture
benefit, the rates of mortality assumed may be not more than those shown in
the Commissioners 1980 Extended Term Insurance Table for policies of
ordinary insurance and not more than the Commissioners 1961 Industrial
Extended Term Insurance Table for policies of industrial insurance;
(e) For insurance issued on a substandard basis, the calculation of
any such adjusted premiums and present values may be based on appropriate
modifications of the tables listed in paragraph (d) of this subdivision;
(f) For policies issued prior to the operative date of the valuation
manual, any ordinary mortality tables, adopted after 1980 by the NAIC, that
are approved by regulation promulgated by the director for use in
determining the minimum nonforfeiture standard may be substituted for the
Commissioners 1980 Standard Ordinary Mortality Table with or without
Ten-Year Select Mortality Factors or for the Commissioners 1980 Extended
Term Insurance Table;
(g) For policies issued on or after the operative date of the
valuation manual, the valuation manual shall provide the mortality table
for use in determining the minimum nonforfeiture standard that may be
substituted for the Commissioners 1980 Standard Ordinary Mortality Table
with or without Ten-Year Select Mortality Factors or for the Commissioners
1980 Extended Term Insurance Table. If the director approves by regulation
any ordinary mortality table adopted by the NAIC for use in determining the
minimum nonforfeiture standard for policies issued on or after the
operative date of the valuation manual, such minimum nonforfeiture standard
supersedes the minimum nonforfeiture standard provided by the valuation
manual;
(h) For policies issued prior to the operative date of the valuation
manual, any industrial mortality tables, adopted after 1980 by the NAIC,
that are approved by regulation promulgated by the director for use in
determining the minimum nonforfeiture standard may be substituted for the
Commissioners 1961 Standard Industrial Mortality Table or for the
Commissioners 1961 Industrial Extended Term Insurance Table;
(i) For policies issued on or after the operative date of the
valuation manual, the valuation manual shall provide the mortality table
for use in determining the minimum nonforfeiture standard that may be
substituted for the Commissioners 1961 Standard Industrial Mortality Table
or the Commissioners 1961 Industrial Extended Term Insurance Table. If the
director approves by regulation any industrial mortality table adopted by
the NAIC for use in determining the minimum nonforfeiture standard for
policies issued on or after the operative date of the valuation manual,
such minimum nonforfeiture standard supersedes the minimum nonforfeiture
standard provided by the valuation manual.
(10) The nonforfeiture interest rate is defined as follows:
(a) For policies issued prior to the operative date of the valuation
manual, the nonforfeiture rate per annum for any policy issued in a
particular calendar year shall be equal to one hundred twenty-five percent
of the calendar year statutory valuation interest rate for such policy as
defined in section 376.380 rounded to the nearer one-quarter of one
percent;
(b) For policies issued on or after the operative date of the
valuation manual, the nonforfeiture interest rate per annum for any policy
issued in a particular calendar year shall be provided by the valuation
manual.
(11) Notwithstanding any other provision of law to the contrary, any
refiling of nonforfeiture values or their methods of computation for any
previously approved policy form which involves only a change in the
interest rate or mortality table used to compute nonforfeiture values shall
not require refiling of any other provisions of that policy form.
(12) After the effective date of this subsection, any company may
file with the director a written notice of its election to comply with the
provisions of this subsection after a specified date before January 1,
1989, which shall be the operative date of this subsection for such
company. If a company makes no such election, the operative date of this
subsection for such company shall be January 1, 1989.
15. In the case of any plan of life insurance which provides for
future premium determination, the amounts of which are to be determined by
the insurance company based on then estimates of future experience, or in
the case of any plan of life insurance which is of such a nature that
minimum values cannot be determined by the methods described in subsections
1 to 14 of this section, then:
(1) The director must be satisfied that the benefits provided under
the plan are substantially as favorable to policyholders and insureds as
the minimum benefits otherwise required by subsections 1 to 14 of this
section;
(2) The director must be satisfied that the benefits and the pattern
of premiums of that plan are not such as to mislead prospective
policyholders or insureds;
(3) The cash surrender values and paid-up nonforfeiture benefits
provided by the plan must not be less than the minimum values and benefits
required for the plan computed by a method consistent with the principles
of this section, as determined by regulations promulgated by the director.
16. Any cash surrender value and any paid-up nonforfeiture benefit,
available under the policy in the event of default in a premium payment due
at any time other than on the policy anniversary, shall be calculated with
allowance for the lapse of time and the payment of fractional premiums
beyond the last preceding policy anniversary. All values referred to in
subsections 5, 6, 7, 8, 9, 10, 11, 12, 13, and 14 of this section may be
calculated upon the assumption that any death benefit is payable at the end
of the policy year of death. The net value of any paid-up additions, other
than paid-up term additions, shall be not less than the amounts used to
provide such additions.
17. Notwithstanding the provisions of subsection 5 of this section,
additional benefits payable:
(1) In the event of death or dismemberment by accident or accidental
means;
(2) In the event of total and permanent disability;
(3) As reversionary annuity or deferred reversionary annuity
benefits;
(4) As term insurance benefits provided by a rider or supplemental
policy provision to which, if issued as a separate policy, this section
would not apply;
(5) As term insurance on the life of a child or on the lives of
children provided in a policy on the life of a parent of the child, if such
term insurance expires before the child's age is twenty-six, is uniform in
amount after the child's age is one, and has not become paid up by reason
of the death of a parent of the child; and
(6) As other policy benefits additional to life insurance and
endowment benefits, and premiums for all such additional benefits; shall be
disregarded in ascertaining cash surrender values and nonforfeiture
benefits required by this section, and no such additional benefits shall be
required to be included in any paid-up nonforfeiture benefits.
18. (1) This subsection, in addition to all other applicable
subsections of this section, shall apply to all policies issued on or after
January 1, 1986. Any cash surrender value available under the policy in
the event of default in a premium payment due on any policy anniversary
shall be in an amount which does not differ by more than two-tenths of one
percent of either the amount of insurance, if the insurance be uniform in
amount, or the average amount of insurance at the beginning of each of the
first ten policy years, from the sum of the greater of zero and the basic
cash value hereinafter specified and the present value of any existing
paid-up additions less the amount of any indebtedness to the company under
the policy.
(2) The basic cash value shall be equal to the present value, on such
anniversary, of the future guaranteed benefits which would have been
provided for by the policy, excluding any existing paid-up additions and
before deduction of any indebtedness to the company, if there had been no
default, less the then present value of the nonforfeiture factors, as
defined in subdivision (3) of this subsection, corresponding to premiums
which would have fallen due on and after such anniversary. The effects on
the basic cash value of supplemental life insurance or annuity benefits or
of family coverage, as described in subsection 5 of this section or in
subsections 7, 8, 9, 10, and 11 of this section, whichever is applicable,
shall be the same as are the effects specified in subsection 5 of this
section or in subsections 7, 8, 9, 10, and 11 of this section, whichever is
applicable on the cash surrender values defined in that subsection.
(3) The nonforfeiture factor for each policy year shall be an amount
equal to a percentage of the adjusted premium for the policy year, as
defined in subsections 7, 8, 9, 10, and 11 of this section or in subsection
14 of this section, whichever is applicable. Except as is required by
subdivision (4) of this subsection, such percentage:
(a) Must be the same percentage for each policy year between the
second policy anniversary and the later of the fifth policy anniversary or
the first policy anniversary at which there is available under the policy a
cash surrender value in an amount, before including any paid-up additions
and before deducting any indebtedness, of at least two-tenths of one
percent of either the amount of insurance, if the insurance be uniform in
amount, or the average amount of insurance at the beginning of each of the
first ten policy years; and
(b) Must be such that no percentage after the later of the two policy
anniversaries specified in paragraph (a) of this subdivision may apply to
fewer than five consecutive policy years. No basic cash value may be less
than the value which would be obtained if the adjusted premiums for the
policy, as defined in subsections 7, 8, 9, 10, and 11 of this section or in
subsection 14 of this section, whichever is applicable, were substituted
for the nonforfeiture factors in the calculation of the basic cash value.
(4) All adjusted premiums and present values referred to in this
subsection shall for a particular policy be calculated on the same
mortality and interest bases as are used in demonstrating the policy's
compliance with the other subsections of this section. The cash surrender
values referred to in this subsection shall include any endowment benefits
provided for by the policy.
(5) Any cash surrender value available other than in the event of
default in a premium payment due on a policy anniversary, and the amount of
any paid-up nonforfeiture benefit available under the policy in the event
of default in a premium payment shall be determined in manners consistent
with the manners specified for determining the analogous minimum amounts in
subsections 4, 5, 6, 14, and 16 of this section. The amounts of any cash
surrender values and of any paid-up nonforfeiture benefits granted in
connection with additional benefits such as those listed as subdivisions
(1) to (6) in subsection 17 shall conform with the principles of this
subsection.
19. (1) This section shall not apply to any of the following:
(a) Reinsurance;
(b) Group insurance;
(c) Pure endowments;
(d) Annuities or reversionary annuity contracts;
(e) Term policies of uniform amounts, which provide no guaranteed
nonforfeiture or endowment benefits, or renewals thereof of twenty years or
less expiring before age seventy-one, for which uniform premiums are
payable during the entire term of the policy;
(f) Term policies of decreasing amounts, which provide no guaranteed
nonforfeiture or endowment benefits, on which each adjusted premium
calculated as specified in subsections 7, 8, 9, 10, 11, 12, 13, and 14 of
this section is less than the adjusted premium so calculated on a term
policy of uniform amount, or renewal thereof, which provides no guaranteed
nonforfeiture or endowment benefits, issued at the same age and for the
same initial amount of insurance, and for a term of twenty years or less
expiring before age seventy-one, for which uniform premiums are payable
during the entire term of the policy;
(g) Policies, which provide no guaranteed nonforfeiture or endowment
benefits, for which no cash surrender value, if any, or present value of
any paid-up nonforfeiture benefit, at the beginning of any policy year,
calculated as specified in subsections 5 to 14 of this section, exceeds two
and one-half percent of the amount of insurance at the beginning of the
same policy year;
(h) Policies which shall be delivered outside this state through an
agent or other representative of the company issuing the policies.
(2) For purposes of determining the applicability of this section,
the expiration date for a joint term life insurance policy shall be the age
at expiry of the oldest life.
20. After the effective date of this section, any company may file
with the director a written notice of its election to comply with the
provisions of this section after a specified date before January 1, 1948.
After the filing of such notice, then upon such specified date, which shall
be the operative date for such company, this section shall become operative
with respect to the policies thereafter issued by such company. If a
company makes no such election, the operative date of this section for such
company shall be January 1, 1948.
(L. 1943 p. 596 § 5855A, A.L. 1959 H.B. 267, A.L. 1961 p. 181, A.L.
1965 p. 581, A.L. 1975 S.B. 116, A.L. 1979 S.B. 325, A.L. 1982
S.B. 469, A.L. 2015 S.B. 164)
*Word "and" appears here in original rolls.
1991
1991
376.670. 1. In the case of policies issued on or after the operative
date of this section, as defined in subsection 14, no policy of life
insurance, except as stated in subsection 13, shall be delivered or issued
for delivery in this state unless it shall contain in substance the following
provisions, or corresponding provisions which in the opinion of the director
of the department of insurance, financial institutions and professional
registration are at least as favorable to the defaulting or surrendering
policyholder as are the minimum requirements specified in this section and
are essentially in compliance with subsection 12a of this section:
(1) That, in the event of default in any premium payment, the company
will grant, upon proper request not later than sixty days after the due date
of the premium in default, a paid-up nonforfeiture benefit on a plan
stipulated in the policy, effective as of such due date, of such amount as
may be herein specified. In lieu of such stipulated paid-up nonforfeiture
benefit, the company may substitute, upon proper request not later than sixty
days after the due date of the premium in default, an actuarially equivalent
alternative paid-up nonforfeiture benefit which provides a greater amount or
longer period of death benefits or, if applicable, a greater amount or
earlier payment of endowment benefits;
(2) That, upon surrender of the policy within sixty days after the due
date of any premium payment in default after premiums have been paid for at
least three full years in the case of ordinary insurance or five full years
in the case of industrial insurance, the company will pay, in lieu of any
paid-up nonforfeiture benefit, a cash surrender value of such amount as may
be herein specified;
(3) That a specified paid-up nonforfeiture benefit shall become effective
as specified in the policy unless the person entitled to make such election
elects another available option not later than sixty days after the due date
of the premium in default;
(4) That, if the policy shall have become paid up by completion of all
premium payments or if it is continued under any paid-up nonforfeiture
benefit which became effective on or after the third policy anniversary in
the case of ordinary insurance or the fifth policy anniversary in the case of
industrial insurance, the company will pay, upon surrender of the policy
within thirty days after any policy anniversary, a cash surrender value of
such amount as may be herein specified;
(5) In the case of policies which cause, on a basis guaranteed in the
policy, unscheduled changes in benefits or premiums, or which provide an
option for changes in benefits or premiums other than a change to a new
policy, a statement of the mortality table, interest rate, and method used in
calculating cash surrender values and the paid-up nonforfeiture benefits
available under the policy. In the case of all other policies, a statement of
the mortality table and interest rate used in calculating the cash surrender
values and the paid-up nonforfeiture benefits available under the policy,
together with a table showing the cash surrender value, if any, and paid-up
nonforfeiture benefit, if any, available under the policy on each policy
anniversary either during the first twenty policy years or during the term of
the policy, whichever is shorter, such values and benefits to be calculated
upon the assumption that there are no dividends or paid-up additions credited
to the policy and that there is no indebtedness to the company on the policy;
(6) A statement that the cash surrender values and the paid-up
nonforfeiture benefits available under the policy are not less than the
minimum values and benefits required by or pursuant to the insurance law of
the state in which the policy is delivered; an explanation of the manner in
which the cash surrender values and the paid-up nonforfeiture benefits are
altered by the existence of any paid-up additions credited to the policy or
any indebtedness to the company on the policy; if a detailed statement of the
method of computation of the values and benefits shown in the policy is not
stated therein, a statement that such method of computation has been filed
with the insurance supervisory official of the state in which the policy is
delivered; and a statement of the method to be used in calculating the cash
surrender value and paid-up nonforfeiture benefit available under the policy
on any policy anniversary beyond the last anniversary for which such values
and benefits are consecutively shown in the policy.
2. Any of the foregoing provisions or portions thereof not applicable by
reason of the plan of insurance may, to the extent inapplicable, be omitted
from the policy.
3. The company shall reserve the right to defer the payment of any cash
surrender value for a period of six months after demand therefor with
surrender of the policy.
4. (1) Any cash surrender value available under the policy in the event
of default in a premium payment due on any policy anniversary, whether or not
required by subsection 1, shall be an amount not less than the excess, if
any, of the present value, on such anniversary, of the future guaranteed
benefits which would have been provided for by the policy if there had been
no default, including any existing paid-up additions, over the sum of the then
present value of the adjusted premiums as defined in subsections 6, 7, 8, 8a,
9, 10, 10a, and 10b corresponding to premiums which would have fallen due on
and after such anniversary, and the amount of any indebtedness to the company
on the policy.
(2) For any policy issued on or after the operative date of subsection
10b of this section which provides supplemental life insurance or annuity
benefits at the option of the insured for an identifiable additional premium
by rider or supplemental policy provision, the cash surrender value referred
to in subdivision (1) of this subsection shall be an amount not less than the
sum of the cash surrender value for an otherwise similar policy issued at the
same age without such rider or supplemental policy provision and the cash
surrender value for a policy which provides only the benefits otherwise
provided by such rider or supplemental policy provision.
(3) For any family policy issued on or after the operative date of
subsection 10b of this section which defines a primary insured and provides
term insurance on the life of the spouse of the primary insured expiring
before the spouse's age seventy-one, the cash surrender value referred to in
subdivision (1) of this subsection shall be an amount not less than the sum
of the cash surrender value for an otherwise similar policy issued at the same
age without such term insurance on the life of the spouse and the cash
surrender value for a policy which provides only the benefits otherwise
provided by such term insurance on the life of the spouse.
(4) Any cash surrender value available within thirty days after any
policy anniversary under any policy paid up by completion of all premium
payments or any policy continued under any paid-up nonforfeiture benefit,
whether or not required by subsection 1, shall be an amount not less than the
present value, on such anniversary, of the future guaranteed benefits
provided for the policy, including any existing paid-up additions, decreased
by any indebtedness to the company on the policy.
5. Any paid-up nonforfeiture benefit available under the policy in the
event of default in a premium payment due on any policy anniversary shall be
such that its present value as of such anniversary shall be at least equal to
the cash surrender value then provided for by the policy or, if none is
provided for, that cash surrender value which would have been required by
this section in the absence of the condition that premiums shall have been
paid for at least a specified period.
6. This subsection and subsections 7, 8, 8a, and 9 of this section shall
not apply to policies issued on or after the operative date of subsection 10b
of this section. Except as provided in subsection 8a, the adjusted premiums
for any policy shall be calculated on an annual basis and shall be such
uniform percentage of the respective premiums specified in the policy for each
policy year, excluding any extra premiums charged because of impairments or
special hazards, that the present value, at the date of issue of the policy,
of all such adjusted premiums shall be equal to the sum of:
(1) The then present value of the future guaranteed benefits provided for
by the policy;
(2) Two percent of the amount of insurance, if the insurance be uniform
in amount, or of the equivalent uniform amount, as herein defined, if the
amount of insurance varies with duration of the policy;
(3) Forty percent of the adjusted premium for the first policy year;
(4) Twenty-five percent of either the adjusted premiums for the first
policy year or the adjusted premium for a whole life policy of the same
uniform or equivalent uniform amount with uniform premiums for the whole of
life issued at the same age for the same amount of insurance, whichever is
less.
7. Provided, however, that in applying the percentages specified in
subdivisions (3) and (4) of subsection 6, no adjusted premium shall be deemed
to exceed four percent of the amount of insurance or uniform amount
equivalent thereto. The date of issue of a policy for the purpose of
subsections 6, 7, 8, 8a and 9 shall be the date as of which the rated age of
the insured is determined.
8. In the case of a policy providing an amount of insurance varying with
duration of the policy, the equivalent uniform amount thereof for the purpose
of subsections 6, 7, 8, 8a and 9 shall be deemed to be the uniform amount of
insurance provided by an otherwise similar policy, containing the same
endowment benefit or benefits, if any, issued at the same age and for the
same term, the amount of which does not vary with duration and the benefits
under which have the same present value at the date of issue as the benefits
under the policy; provided, however, that in the case of a policy providing a
varying amount of insurance issued on the life of a child under age ten, the
equivalent uniform amount may be computed as though the amount of insurance
provided by the policy prior to the attainment of age ten were the amount
provided by such policy at age ten.
8a. The adjusted premiums for any policy providing term insurance
benefits by rider or supplemental policy provision shall be equal to (a) the
adjusted premiums for an otherwise similar policy issued at the same age
without such term insurance benefits, increased, during the period for which
premiums for such term insurance benefits are payable, by (b) the adjusted
premiums for such term insurance, the foregoing items (a) and (b) being
calculated separately and as specified in subsections 6, 7 and 8 except that,
for the purposes of subdivisions (2), (3) and (4) of subsection 6, the amount
of insurance or equivalent uniform amount of insurance used in the
calculation of the adjusted premiums referred to in (b) shall be equal to the
excess of the corresponding amount determined for the entire policy over the
amount used in the calculation of the adjusted premiums in (a).
9. Except as otherwise provided in subsections 10 and 10a, all adjusted
premiums and present values referred to in this section shall, for all
policies of ordinary insurance, be calculated on the basis of the
Commissioners 1941 Standard Ordinary Mortality Table, provided that for any
category of ordinary insurance issued on and after the effective date of this
amendment on female risks, adjusted premiums and present values may be
calculated according to an age not more than three years younger than the
actual age of the insured and such calculations for all policies of
industrial insurance shall be made on the basis of the 1941 Standard
Industrial Mortality Table. All calculations shall be made on the basis of
the rate of interest, not exceeding three and one-half percent per annum,
specified in the policy for calculating cash surrender values and paid-up
nonforfeiture benefits; provided, however, that in calculating the present
value of any paid-up term insurance with accompanying pure endowment, if any,
offered as a nonforfeiture benefit, the rates of mortality assumed may be not
more than one hundred and thirty percent of the rates of mortality according
to such applicable table; provided, further, that for insurance issued on a
substandard basis, the calculation of any such adjusted premiums and present
values may be based on such other table of mortality as may be specified by
the company and approved by the director.
10. This subsection shall not apply to ordinary policies issued on or
after the operative date of subsection 10b. In the case of ordinary policies
issued on or after the operative date provided in this subsection, all
adjusted premiums and present values referred to in this section shall be
calculated on the basis of the Commissioners 1958 Standard Ordinary Mortality
Table and the rate of interest specified in the policy for calculating cash
surrender values and paid-up nonforfeiture benefits, provided that such rate
of interest shall not exceed three and one-half percent per annum, except
that a rate of interest not exceeding four percent per annum may be used for
policies issued on or after September 28, 1975, and prior to September 28,
1979, and a rate of interest not exceeding five and one-half percent per
annum may be used for policies issued on or after September 28, 1979, and
provided that for any category of ordinary insurance issued on female risks,
adjusted premiums and present values may be calculated according to an age
not more than six years younger than the actual age of the insured; provided,
however, that in calculating the present value of any paid-up term insurance
with accompanying pure endowment, if any, offered as a nonforfeiture benefit,
the rates of mortality assumed may be not more than those shown in the
Commissioners 1958 Extended Term Insurance Table; provided, further, that for
insurance issued on a substandard basis, the calculation of any such adjusted
premiums and present values may be based on such other table of mortality as
may be specified by the company and approved by the director. After the date
when this subsection becomes effective, any company may file with the
director a written notice of its election to comply with the provisions of
this subsection after a specified date before January 1, 1966. After the
filing of such notice, then upon such specified date, which shall be the
operative date of this subsection for such company, this subsection shall
become operative with respect to the ordinary policies thereafter issued by
such company. If a company makes no such election, the operative date of this
subsection for such company shall be January 1, 1966.
10a. This subsection shall not apply to industrial policies issued on or
after the operative date of subsection 10b. In the case of industrial
policies issued on or after the operative date of this subsection as defined
herein, all adjusted premiums and present values referred to in this section
shall be calculated on the basis of the Commissioners 1961 Standard
Industrial Mortality Table and the rate of interest specified in the policy
for calculating cash surrender values and paid-up nonforfeiture benefits,
provided that such rate of interest shall not exceed three and one-half
percent per annum, except that a rate of interest not exceeding four percent
per annum may be used for policies issued on or after September 28, 1975, and
prior to September 28, 1979, and a rate of interest not exceeding five and
one-half percent per annum may be used for policies issued on or after
September 28, 1979; provided, however, that in calculating the present value
of any paid-up term insurance with accompanying pure endowment, if any,
offered as a nonforfeiture benefit, the rates of mortality assumed may be not
more than those shown in the Commissioners 1961 Industrial Extended Term
Insurance Table; provided, further, that for insurance issued on a substandard
basis, the calculation of any such adjusted premiums and present values may
be based on such other table of mortality as may be specified by the company
and approved by the director. After the date when this subsection becomes
effective, any company may file with the director a written notice of its
election to comply with the provisions of this subsection after a specified
date before January 1, 1968. After the filing of such notice, then upon such
specified date, which shall be the operative date of this subsection for such
company, this subsection shall become operative with respect to the
industrial policies thereafter issued by such company. If a company makes no
such election, the operative date of this subsection for such company shall
be January 1, 1968.
10b. (1) This subsection shall apply to all policies issued on or after
the operative date of this subsection as defined herein. Except as provided
in subdivision (7) of this subsection, the adjusted premiums for any policy
shall be calculated on an annual basis and shall be such uniform percentage
of the respective premiums specified in the policy for each policy year,
excluding amounts payable as extra premiums to cover impairments or special
hazards and also excluding any uniform annual contract charge or policy fee
specified in the policy in a statement of the method to be used in
calculating the cash surrender values and paid-up nonforfeiture benefits,
that the present value, at the date of issue of the policy, of all adjusted
premiums shall be equal to the sum of:
(a) The then present value of the future guaranteed benefits provided for
by the policy;
(b) One percent of either the amount of insurance, if the insurance be
uniform in amount, or the average amount of insurance at the beginning of
each of the first ten policy years; and
(c) One hundred twenty-five percent of the nonforfeiture net level
premium as hereinafter defined. In applying the percentage specified in
paragraph (c) above, no nonforfeiture net level premium shall be deemed to
exceed four percent of either the amount of insurance, if the insurance be
uniform in amount, or the average amount of insurance at the beginning of
each of the first ten policy years. The date of issue of a policy for the
purpose of this subsection shall be the date as of which the rated age of the
insured is determined.
(2) The nonforfeiture net level premium shall be equal to the present
value, at the date of issue of the policy, of the guaranteed benefits
provided for by the policy divided by the present value, at the date of issue
of the policy, of an annuity of one per annum payable on the date of issue of
the policy and on each anniversary of such policy on which a premium falls
due.
(3) In the case of policies which cause, on a basis guaranteed in the
policy, unscheduled changes in benefits or premiums, or which provide an
option for changes in benefits or premiums other than a change to a new
policy, the adjusted premiums and present values shall initially be
calculated on the assumption that future benefits and premiums do not change
from those stipulated at the date of issue of the policy. At the time of any
such change in the benefits or premiums the future adjusted premiums,
nonforfeiture net level premiums and present values shall be recalculated on
the assumption that future benefits and premiums do not change from those
stipulated by the policy immediately after the change.
(4) Except as otherwise provided in subdivision (7) of this subsection,
the recalculated future adjusted premiums for any such policy shall be such
uniform percentage of the respective future premiums specified in the policy
for each policy year, excluding amounts payable as extra premiums to cover
impairments and special hazards, and also excluding any uniform annual
contract charge or policy fee specified in the policy in a statement of the
method to be used in calculating the cash surrender values and paid-up
nonforfeiture benefits, that the present value, at the time of change to the
newly defined benefits or premiums, of all such future adjusted premiums
shall be equal to the excess of (A) the sum of the then present value of the
then future guaranteed benefits provided for by the policy and the additional
expense allowance, if any, over (B) the then cash surrender value, if any, or
present value of any paid-up nonforfeiture benefit under the policy.
(5) The additional expense allowance, at the time of the change to the
newly defined benefits or premiums, shall be the sum of:
(a) One percent of the excess, if positive, of the average amount of
insurance at the beginning of each of the first ten policy years subsequent
to the change over the average amount of insurance prior to the change at the
beginning of each of the first ten policy years subsequent to the time of the
most recent previous change, or, if there has been no previous change, the
date of issue of the policy; and
(b) One hundred twenty-five percent of the increase, if positive, in the
nonforfeiture net level premium.
(6) The recalculated nonforfeiture net level premium shall be equal to
the result obtained by dividing (a) by (b) where:
(a) Equals the sum of:
a. The nonforfeiture net level premium applicable prior to the change
times the present value of an annuity of one per annum payable on each
anniversary of the policy on or subsequent to the date of the change on which
a premium would have fallen due had the change not occurred; and
b. The present value of the increase in future guaranteed benefits
provided for by the policy; and
(b) Equals the present value of an annuity of one per annum payable on
each anniversary of the policy on or subsequent to the date of change on
which a premium falls due.
(7) Notwithstanding any other provisions of this subsection to the
contrary, in the case of a policy issued on a substandard basis which
provides reduced graded amounts of insurance so that in each policy year such
policy has the same tabular mortality cost as an otherwise similar policy
issued on the standard basis which provides higher uniform amounts of
insurance, adjusted premiums and present values for such substandard policy
may be calculated as if it were issued to provide such higher uniform amounts
of insurance on the standard basis.
(8) All adjusted premiums and present values referred to in this section
shall for all policies of ordinary insurance be calculated on the basis of
the Commissioners 1980 Standard Ordinary Mortality Table or, at the election
of the company for any one or more specified plans of life insurance, the
Commissioners 1980 Standard Ordinary Mortality Table with Ten-Year Select
Mortality Factors. All adjusted premiums and present values referred to in
this section shall for all policies of industrial insurance be calculated on
the basis of the Commissioners 1961 Standard Industrial Mortality Table. All
adjusted premiums and present values referred to in this section shall for
all policies issued in a particular calendar year be calculated on the basis
of a rate of interest not exceeding the nonforfeiture interest rate as defined
in this subsection for policies issued in that calendar year.
(9) Except as provided in subdivision (8) of this subsection:
(a) At the option of the company, calculations for all policies issued in
a particular calendar year may be made on the basis of a rate of interest not
exceeding the nonforfeiture interest rate, as defined in this subsection, for
policies issued in the immediately preceding calendar year;
(b) Under any paid-up nonforfeiture benefit, including any paid-up
dividend additions, any cash surrender value available, whether or not
required by subsection 1 of this section, shall be calculated on the basis of
the mortality table and rate of interest used in determining the amount of
such paid-up nonforfeiture benefit and paid-up dividend additions, if any;
(c) A company may calculate the amount of any guaranteed paid-up
nonforfeiture benefit including any paid-up additions under the policy on the
basis of an interest rate no lower than that specified in the policy for
calculating cash surrender values;
(d) In calculating the present value of any paid-up term insurance with
accompanying pure endowment, if any, offered as a nonforfeiture benefit, the
rates of mortality assumed may be not more than those shown in the
Commissioners 1980 Extended Term Insurance Table for policies of ordinary
insurance and not more than the Commissioners 1961 Industrial Extended Term
Insurance Table for policies of industrial insurance;
(e) For insurance issued on a substandard basis, the calculation of any
such adjusted premiums and present values may be based on appropriate
modifications of the tables listed in subdivision (d) of this subsection;
(f) Any ordinary mortality tables, adopted after 1980 by the National
Association of Insurance Commissioners, that are approved by regulation
promulgated by the director for use in determining the minimum nonforfeiture
standard may be substituted for the Commissioners 1980 Standard Ordinary
Mortality Table with or without Ten-Year Select Mortality Factors or for the
Commissioners 1980 Extended Term Insurance Table;
(g) Any industrial mortality tables, adopted after 1980 by the National
Association of Insurance Commissioners, that are approved by regulation
promulgated by the director for use in determining the minimum nonforfeiture
standard may be substituted for the Commissioners 1961 Standard Industrial
Mortality Table or* for the Commissioners 1961 Industrial Extended Term
Insurance Table;
(10) The nonforfeiture interest rate per annum for any policy issued in a
particular calendar year shall be equal to one hundred twenty-five percent of
the calendar year statutory valuation interest rate for such policy as
defined in section 376.380 rounded to the nearer one-quarter of one percent;
(11) Notwithstanding any other provision of law to the contrary, any
refiling of nonforfeiture values or their methods of computation for any
previously approved policy form which involves only a change in the interest
rate or mortality table used to compute nonforfeiture values shall not
require refiling of any other provisions of that policy form;
(12) After the effective date of this subsection, any company may file
with the director a written notice of its election to comply with the
provisions of this subsection after a specified date before January 1, 1989,
which shall be the operative date of this subsection for such company. If a
company makes no such election, the operative date of this subsection for
such company shall be January 1, 1989.
10c. In the case of any plan of life insurance which provides for future
premium determination, the amounts of which are to be determined by the
insurance company based on then estimates of future experience, or in the
case of any plan of life insurance which is of such a nature that minimum
values cannot be determined by the methods described in subsections 1 to 10b
of this section, then:
(1) The director must be satisfied that the benefits provided under the
plan are substantially as favorable to policyholders and insureds as the
minimum benefits otherwise required by subsections 1 to 10b of this section;
(2) The director must be satisfied that the benefits and the pattern of
premiums of that plan are not such as to mislead prospective policyholders or
insureds;
(3) The cash surrender values and paid-up nonforfeiture benefits provided
by the plan must not be less than the minimum values and benefits required
for the plan computed by a method consistent with the principles of this
section, as determined by regulations promulgated by the director.
11. Any cash surrender value and any paid-up nonforfeiture benefit,
available under the policy in the event of default in a premium payment due
at any time other than on the policy anniversary, shall be calculated with
allowance for the lapse of time and the payment of fractional premiums beyond
the last preceding policy anniversary. All values referred to in subsections
4, 5, 6, 7, 8, 8a, 9, 10, 10a and 10b of this section may be calculated upon
the assumption that any death benefit is payable at the end of the policy
year of death. The net value of any paid-up additions, other than paid-up
term additions, shall be not less than the amounts used to provide such
additions.
12. Notwithstanding the provisions of subsection 4, additional benefits
payable:
(1) In the event of death or dismemberment by accident or accidental
means;
(2) In the event of total and permanent disability;
(3) As reversionary annuity or deferred reversionary annuity benefits;
(4) As term insurance benefits provided by a rider or supplemental policy
provision to which, if issued as a separate policy, this section would not
apply;
(5) As term insurance on the life of a child or on the lives of children
provided in a policy on the life of a parent of the child, if such term
insurance expires before the child's age is twenty-six, is uniform in amount
after the child's age is one, and has not become paid up by reason of the
death of a parent of the child; and
(6) As other policy benefits additional to life insurance and endowment
benefits, and premiums for all such additional benefits; shall be disregarded
in ascertaining cash surrender values and nonforfeiture benefits required by
this section, and no such additional benefits shall be required to be
included in any paid-up nonforfeiture benefits.
12a. (1) This subsection, in addition to all other applicable
subsections of this section, shall apply to all policies issued on or after
January 1, 1986. Any cash surrender value available under the policy in the
event of default in a premium payment due on any policy anniversary shall be
in an amount which does not differ by more than two-tenths of one percent of
either the amount of insurance, if the insurance be uniform in amount, or the
average amount of insurance at the beginning of each of the first ten policy
years, from the sum of the greater of zero and the basic cash value
hereinafter specified and the present value of any existing paid-up additions
less the amount of any indebtedness to the company under the policy.
(2) The basic cash value shall be equal to the present value, on such
anniversary, of the future guaranteed benefits which would have been provided
for by the policy, excluding any existing paid-up additions and before
deduction of any indebtedness to the company, if there had been no default,
less the then present value of the nonforfeiture factors, as defined in
subdivision (3) of this subsection, corresponding to premiums which would
have fallen due on and after such anniversary. The effects on the basic cash
value of supplemental life insurance or annuity benefits or of family
coverage, as described in subsection 4 of this section or in subsections 6,
7, 8, 8a and 9 of this section, whichever is applicable, shall be the same as
are the effects specified in subsection 4 of this section or in subsections
6, 7, 8, 8a and 9 of this section, whichever is applicable on the cash
surrender values defined in that subsection.
(3) The nonforfeiture factor for each policy year shall be an amount
equal to a percentage of the adjusted premium for the policy year, as defined
in subsections 6, 7, 8, 8a and 9 of this section or in subsection 10b of this
section, whichever is applicable. Except as is required by subdivision (4) of
this subsection, such percentage:
(a) Must be the same percentage for each policy year between the second
policy anniversary and the later of the fifth policy anniversary or the first
policy anniversary at which there is available under the policy a cash
surrender value in an amount, before including any paid-up additions and
before deducting any indebtedness, of at least two-tenths of one percent of
either the amount of insurance, if the insurance be uniform in amount, or the
average amount of insurance at the beginning of each of the first ten policy
years; and
(b) Must be such that no percentage after the later of the two policy
anniversaries specified in paragraph (a) of this subdivision may apply to
fewer than five consecutive policy years. No basic cash value may be less
than the value which would be obtained if the adjusted premiums for the
policy, as defined in subsections 6, 7, 8, 8a and 9 of this section or in
subsection 10b of this section, whichever is applicable, were substituted for
the nonforfeiture factors in the calculation of the basic cash value.
(4) All adjusted premiums and present values referred to in this
subsection shall for a particular policy be calculated on the same mortality
and interest bases as are used in demonstrating the policy's compliance with
the other subsections of this section. The cash surrender values referred to
in this subsection shall include any endowment benefits provided for by the
policy.
(5) Any cash surrender value available other than in the event of default
in a premium payment due on a policy anniversary, and the amount of any
paid-up nonforfeiture benefit available under the policy in the event of
default in a premium payment shall be determined in manners consistent with
the manners specified for determining the analogous minimum amounts in
subsections 3, 4, 5, 10b and 11 of this section. The amounts of any cash
surrender values and of any paid-up nonforfeiture benefits granted in
connection with additional benefits such as those listed as subdivisions (1)
to (6) in subsection 12 shall conform with the principles of this subsection.
13. (1) This section shall not apply to any of the following:
(a) Reinsurance;
(b) Group insurance;
(c) Pure endowments;
(d) Annuities or reversionary annuity contracts;
(e) Term policies of uniform amounts, which provide no guaranteed
nonforfeiture or endowment benefits, or renewals thereof of twenty years or
less expiring before age seventy-one, for which uniform premiums are payable
during the entire term of the policy;
(f) Term policies of decreasing amounts, which provide no guaranteed
nonforfeiture or endowment benefits, on which each adjusted premium
calculated as specified in subsections 6, 7, 8, 8a, 9, 10, 10a, and 10b is
less than the adjusted premium so calculated on a term policy of uniform
amount, or renewal thereof, which provides no guaranteed nonforfeiture or
endowment benefits, issued at the same age and for the same initial amount of
insurance, and for a term of twenty years or less expiring before age
seventy-one, for which uniform premiums are payable during the entire term of
the policy;
(g) Policies, which provide no guaranteed nonforfeiture or endowment
benefits, for which no cash surrender value, if any, or present value of any
paid-up nonforfeiture benefit, at the beginning of any policy year,
calculated as specified in subsections 4 to 10b of this section, exceeds two
and one-half percent of the amount of insurance at the beginning of the same
policy year;
(h) Policies which shall be delivered outside this state through an agent
or other representative of the company issuing the policies.
(2) For purposes of determining the applicability of this section, the
expiration date for a joint term life insurance policy shall be the age at
expiry of the oldest life.
14. After the effective date of this section, any company may file with
the director a written notice of its election to comply with the provisions
of this section after a specified date before January 1, 1948. After the
filing of such notice, then upon such specified date, which shall be the
operative date for such company, this section shall become operative with
respect to the policies thereafter issued by such company. If a company
makes no such election, the operative date of this section for such company
shall be January 1, 1948.
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